Practical Ecommerce

Legal: The Top Ten Risks For Online Businesses

Legal Risks We are often posed a “simple question” by sophisticated clients. Sometimes it is a simple question with a simple answer. More often than not, though, it is not. Serious web businesses know that if you operate in the “white hat” arena, never take a chance, and never go into the unknown; it is difficult to compete. On the other hand, they also know that if they use illegal tactics then their entire business, and their financial well-being, is at risk. So, smart online businesses operate in the “gray hat” arena, a competitive landscape with many different shades of gray, to be sure. And a landscape that often raises more complex legal issues.

One of the most important skills an online business should have is the ability to identify potential legal issues, and then leave the analyses and legal opinions to the lawyers.

Here’s some guidance to tip you off that you may have some issues:

  1. Name Clearance: You fail to get “clearance” to use your chosen name and it infringes on the trademark (it need not be registered) of a competing product or service.
  2. Creative Authorship: You or your web developer “borrow” some code and text and use it on your site.
  3. Advertising Trademark Infringement: You use someone’s trademark in your content, meta tags, ads, or as keywords to trigger ads.
  4. Management of Affiliates: You fail to establish clear performance standards and enforce them.
  5. Editing of User Generated Comments: You control or edit posts from third parties without following the federal and state laws that allow you publisher immunity only if you edit in a certain way.
  6. Data Retrieval: You access sites, either manually or through an automated process, and retrieve information for use on your site, contrary to the terms of use of the site you are accessing.
  7. False Advertising: You make factual claims that are more than mere “puffery” and are material to the decision by your customers to purchase.
  8. Data Integrity: Your customers’ personally identifiable data is maintained, disclosed, or managed contrary to your privacy policy, the new FTC regulations, or in a high risk manner.
  9. SEO Services: You do not understand the tactics your search engine optimization will be using and you end up with either legal liability or a “sandbox” penalty from Google.
  10. Commercial E-mail: You don’t insist upon compliance with the state and federal laws.

Smart and savvy online businesses understand the risks for a couple of reasons. One, obviously, is to avoid crossing the line into illegality. The second reason “separates the wheat from the chaff.” Really smart clients want to know where the line is drawn so they can make a business decision as to what amount of risk they are willing to assume in the context of a risk/reward analysis.

It’s easy to conclude as a business person that you will only use conservative, proven, and common practices. It’s a harder choice to be of the mindset to push the envelope, take an aggressive stance and try new techniques on the leading edge of online marketing strategies and tactics. Some businesses will be push things. Some will not. If you are an aggressive business person, with a mindset to weigh risks and rewards, take calculated chances, and potentially reap huge dividends exponentially greater than conservative competitors, then you have guts. And, you’ll need a lawyer who is an Internet law expert with the experience, judgment, self-confidence and guts to accurately paint for you the shades of gray.

John W. Dozier, Jr.

Bio   •   RSS Feed


email-news-env

Sign up for our email newsletter

Get the Practical Ecommerce RSS feed

Comment ( 1 )

  1. Olaf November 6, 2008 Reply

    Your advise is worth gold. Thank you for the great overview. It is a great eye opener to find all these sources for threats in one summary. Thanks!